Tuesday, 7 April 2009

G-20 money *might* be enough, but oil will NOT be

Kjell Aleklett of ASPO and professor of physics at Uppsala University puts the G20 stimulus trillions into perspective for the whole world::

"The world’s wealthiest nations, the G20 group, have decided to light a fire but have forgotten a very important detail – to check whether there is sufficient fuel to enable the fire to burn.

During the last 20 years we have had global economic growth of approximately 3% per annum. Fuel use in the form of oil has increased, on average, by half of this rate, i.e. 1.5% per annum.

[W]e show that oil production from those fields that are currently in production will decrease by 6 percent per year during the next 5 years. This means a decrease in the rate of production by 18 million barrels per day after 5 years. The G20 nations want to increase oil use but the forces of Nature say that there will be a decrease.

The same nations that now require increased oil consumption will meet in December with the world’s other nations in Copenhagen. They will then discuss what measures they can take to reduce oil consumption.

What the G20 group should discuss is what investments will be required for this transformation of the energy system to become reality."
So where does it end? Will the next boom be cut-off by another oil crunch, leading again to a new bust, as the newly minted money and debt evaporates? The cycle begins anew, until we hit the oil ceiling again? Repeat ad infinitum?